Nike is selling virtual sneakers in metaverse. NFT-based Axie Infinity has seen play-to-earn gamers buy and sell in-game items almost 11.5 million times. With $3.81 billion in transactions, E-sports, which is the live streaming of video games by people over the internet, is worth $1 billion and attracts 26.6 millions monthly viewers.
Commerce in virtual worlds doesn’t seem to be something that’s going to happen, but it is something that is already here. It’s a new, global, and diverse industry so there isn’t much standardization in terms of transferring value.
According to Andre Neves Chief Technology Officer at Zebedee (a payments infrastructure company that focuses on game developers and, recently, metaverse builders), someone’s going do it.
He said that Bitcoin is the best currency to use for this purpose, in a conversation with Karen Webster from PYMNTS.
It doesn’t need to be as complicated as a metaverse or video game. He said that right now, “we’re currently in a virtual universe and we can chat and stream 8K video quality but we are unable to transact any value in this conversation.”
Neves explains that this is due to the fact that each country has its own currency, and its own laws. “So standardizing money for the global and virtual world is really important. You really need that medium to exchange value, without having to make any foray into foreign currency.
Neves stated that Bitcoin, a digitally native currency (a cryptocurrency), ‘provides this capability regardless of any geographic or real-world constraints. “So, regardless of where you are in the world and where I am, we can transact with the exact same monetary standard. It is very powerful to power virtual and real worlds using the same money. We’re only scratching the surface.
Play to win
One paradox of the current virtual world is its growing diversity, but it is also growing together. Video games have become immersive, interactive environments. The economics are shifting to in-game commerce.
The decade-old practice of playing games for free was replaced by paying for access to an internet community.
Neves stated that they are now moving to play-to-earn (which we like to call it), which allows for a bidirectional flow in value.
He says that this is where Bitcoin’s other aspect comes in handy. Neves explained that each one can be broken into 100 million units, called satoshis. These are ideal for nano-transactions and play-to earn.
He said that the current price of a credit card transaction is 60 cents. According to me, the cheapest app in the app store costs around 90 cents. Once that amount is charged to your credit card, it will be $1.20 due to fees. Traditional finance is not able to pay anything below 60 cents. A gamer who makes hundreds of transactions per day can’t have a limit of 60 cents.
Bitcoin does need some help, however, because transactions are now measured in dollars and tens instead of the fractions that a penny is intended. Zebedee relies on the Lightning Network as a Layer 2 solution. It’s simply stacked on top Bitcoin to handle transactions off-chain. This makes it much faster and more affordable.
Zebedee clients offer free games powered via ads. Instead of accepting them, gamers will be able to earn bitcoin by watching them.
Neves stated that they had flipped the model upside down. The game developer still earns ad revenue but some of it is being returned to players. They’re playing, they’re making – it’s a circular system.
Neves stated that the client’s ad return is up to 40% to 80%.
The new world
There are also metaverses, which have become the Next Big Thing after Mark Zuckerberg changed Facebook’s name from Meta to make it more relevant. They are moving away from being a place where people can get together and interact in a virtual environment to one that allows people to interact both socially and economically. Even though metaverses are still in their infancy and the virtual worlds are much more in construction than they are up and running, this is despite the fact that the virtual worlds are still in the infancy stages.
Neves stated that there is no shortage of payment dynamics, but that the key to this interaction is a different type. Interoperability is the key.
Webster was told by him that Meta/Facebook is one of the biggest players in metaverse. They will each have their own metaverse environment. “But interconnectivity and interoperability is what the true metaverse looks like.”
Neves pointed to the Apple and Google App Stores as an example. He said that “this future metaverse can’t occur if there are a lot of gatekeepers running slightly better virtual worlds.”
He said that interoperability is what’s required. “We need open standards so that every user, game developer or service provider can tap into it and activate all their services into the same open standard.
This, in turn, means that ‘the payment railways are required for many of these worlds interconnect with one another. So, the value that you might have obtained from one game can be used to purchase another, but it can also go down the street at a real-world store because it’s the exact same money that’s being used.